The Association of Canadian Pension Management (ACPM) has released a paper that provides recommendations for a framework to facilitate the conversion from traditional private sector DB plans to target benefit plans (TBPs).
It views balanced and manageable conversion rules to be a key facet underlying the successful growth of TBPs in Canada.
Topics addressed in the paper, called the ACPM Target Benefit Plan Supplemental Report, include the following:
- the development of standards of practice for stochastic modelling in TBP actuarial valuations;
- rules for past service conversions with affected beneficiary consent;
- partial conversions where only certain benefits provided under a DB plan are converted to a TBP;
- requirements for the full funding of DB plan deficits on date of conversion in certain cases; and
- the recommendation that the conversion of DC plans to TBPs be permitted.
In addition, the report reviews recent TBP developments, including new provincial legislation and the New Brunswick shared-risk model.
“ACPM is optimistic that target benefit plans can contribute to an improved retirement income system aligned with the goals of our ACPM Five Point Plan,” says ACPM board chair Andrew Harrison. “We also acknowledge that expanding pension coverage for Canadians is a continual process, and there is still much work ahead of us.”
The paper is available on the ACPM’s website.
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